tv Nightly Business Report PBS August 24, 2012 7:00pm-7:30pm PDT
captioning sponsored by wpbt >> this is n.b.r. >> susie: good evening. i'm susie gharib. tom is on assignment. fed chief ben bernanke says there's room to do more to help to the economy. the hope for more stimulus boosted stocks, but economist bob brusca says he's not buying it. the gold rush isn't over. find out what's behind the glittering rise in precious metals. what could a deal on deficit reduction look like? we do the math as we wrap up our coverage of the looming fiscal cliff. that and more tonight on n.b.r.! "there is scope for further action." those words from federal reserve chairman ben bernanke in a letter to a top lawmaker on capitol hill pushed stocks higher today. bernanke's comment came in response to questions from california republican darrell issa, chairman of the house
oversight committee. bernanke added that the benefits need to be balanced against their potential costs and risks. the possibility of more stimulus from the central bank gave investors hope and stocks spiked after that august 22 letter was made public this afternoon. the dow rose 100 points. the nasdaq added 16 and the s&p gained nine points. but in spite of those gains, all three of the major indices were down slightly on the week, their first negative week in a month- and-a-half. robert brusca doesn't believe bernanke will unveil any new policy moves when he speaks at a federal reserve conference in jackson hole wyoming next friday. he's chief economist of fact and opinion economics. bob, nice to see you. you know, people are really expecting something important from bernanke next friday, and in fact, the title of his speech, i understand, is, "monetary policy since the great crisis." you're doubtful that anything
big is going to come out of this. tell us why. >> well, you know, i think what's going to happen is bernanke is very big on getting us perspective, and he's going to talk about what policies have been and how they've been effective and how they've aided the economy. he'll probably give us some estimates of how much better things are than what they could have been if the fed hadn't done anything. i don't think he's going to put new policies on table. i think that he's very happy to tell people he can do more. i think he may even suggest the feds look to see if there are other things it can do that it hasn't done yet to keep hopes up, but the fed has used its most potent ammunition and now has the least-potent things left in its bag of tricks and that's the problem. i don't think the fed is eager to start doing a lot more. it doesn't have a lot of impact with these tools it has. >> susie: let's say the fed will do something, let's just say, because the timing on this is kind of critical. there are only two meetings before the november electiones,
september and october. when do you think it would happen? >> well, you know, october is too late. if they're going to do something, it's a very narrow window. it's a september meeting. the question is whether they're prepared to do it. bernanke said in his letter they want to take account and see what the results are from the policies that they're already pursuing because monetary policy acts with a lag. they're already in the midst of another round of operation twist. so do they want to step on their own tote tails and do something else when they already have something in the works? i really don't think they're there. >> susie: as you know, the head of the european central bank is also going to be at this conference in jackson hole. some people are saying what he says at jackson hole may be more important than what we hear from bernanke. what are your thoughts on that? >> he might actually have policies to announce. i think that he wants to point on this l.t.r.o., this loan plan they have for banks that's been effective, the bailout funds
they're going to have to use, and their willingness to become more aggressive. some of these things are being sorted out in the background right now, but i think he will want to try to backstop confidence in the european expriz the sovereign debt and in the banks in the euro system. i think he has more of an agenda than bernanke does. >> susie: all right a lot going on next week. bob, thanks so much for coming on. have a great weekend. bob brusca of fact and opinion members. >> tom: still ahead, the second costliest natural disaster came ashore here in homestead, florida 20 years ago. we'll take a look at this community and how it rebuilt even as it was hit by the financial storm of the housing collapse. >> susie: gold has been shining all week up 3%-- its best weekly performance since early june. erika miller takes a closer look at what's behind the rally. >> reporter: gold is not just beautiful to look at. the yellow metal is also becoming more attractive as an investment.
gold is now trading near its highest level in more than four months on hopes for new economic stimulus measures around the globe. earlier this week, the federal reserve sent its strongest signal yet that it may launch another massive bond buying program to help the economy. and that possibility of so- called quantitative easing is sparking fears of a weaker dollar and higher inflation. >> the idea is that when we have quantitative easing, investors look to gold as a hedge against inflation as a store of wealth. gold did really well after the second round of quantitative easing, so people are thinking that if we have a third round of quantitative easing, gold prices could really take off. >> reporter: the fed's next meeting is september 12th and 13th. if the central bank does take action, some think gold could surge to a new all-time high. >> i don't think we're going to make it in september. but, you know, maybe towards the middle to the end of the fourth quarter of this year. i do think we're going to see 1,900 and above.
and if punch through that 1,900 area, that $2,000 is right around the corner. >> reporter: gold isn't the only precious metal rallying sharply. platinum is up nearly 10% this month, after an outbreak of violence at a south african mine. although precious metals have regained their luster, it's a different story for industrial metals. most are in bear markets, due mostly to slowing demand from china. >> china is the world's largest consumer of many of the world's industrial metals and china's economic growth has been slowing down in recent weeks, months and quarters. >> reporter: and that's not expected to change soon. so, it's really a tale of two metals markets. precious metals prices are rising on hopes economic weakness will lead to more stimulus. but industrial metals aren't expected to rally-- unless that stimulus actually works. erika miller, "n.b.r.," ny. >> susie: tonight, we conclude
>> susie: tonight, we conclude our weeklong look at the fiscal cliff on a hopeful note. there are some analysts and washington insiders who think next year will bring a great deal of progress on debt and deficits. darren gersh takes a look at just how big that agreement might be. >> reporter: on wall street, they say the best time to buy is when the brokers are crying in their beer, when everyone else has given up hope, when all looks lost. that's how many feel about our nation's debt and deficits. that's also why analysts like andy laperriere think 2013 will be the year congress faces up to our fiscal mess.
>> when you start adding these things up-- the debt ceiling has to be increased, the sequester has to be dealt with. the bush tax cuts have to be dealt with. i don't think you can pass a package that deals with all those things without reducing the deficit. >> reporter: what might that deficit reduction package look like? it will raise taxes. if president obama is reelected, over the next ten years, look for roughly $800 billion in higher taxes from high-income households. even if romney takes the white house, he'll likely have to raise taxes by roughly $250 billion. more will come from spending cuts. look for big cuts in health care and entitlements under romney. and more from defense cuts under president obama. add it all up, and you get somewhere around two or three trillion dollars of deficit reduction. the goal of the package is clear. >> all three of the major ratings agencies have said that if congress doesn't pass significant deficit reduction-- enough to make debt to g.d.p.-- put is on a sustainable path
within a reasonable period of time, that they'll all downgrade. and i think that's going to become the bogey. >> reporter: a two or three trillion dollar deficit reduction package would be enough to stabilize our debt. but budget expert stan collender thinks such an outcome is unlikely. >> i don't see how the politics of this has changed very much. i don't see more people suddenly willing to change on anything. the election is polarization, hyper partisan, and not really providing the kind of forum you need for an honest debate. >> reporter: one thing is clear: the path to a big deficit reduction in 2013 will very likely be messy, uncertain and unsettling for investors. but economist mark zandi says the payoff may be worth the long battle. fiscal nirvana is when we solve or address adequately three problems: the fiscal cliff-- scaling that back. increasing the treasury debt ceiling again, so that we can continue to issue debt and pay on the debt that we owe. and also, third, laying out a credible path to fiscal sustainability. one more thing about fiscal
nirvana: it will likely mean more predictability for our economy and more investment and higher wages and more jobs down the road. nirvana indeed. darren gersh, "n.b.r.," washington. >> susie: a long weekend of waiting and watching ahead for residents of southern florida, as tropical storm isaac picks up strength. isaac is expected to pass over the keys and head into the gulf, potentially making landfall in northwest florida mid-week. the storm comes as south florida marks the 20th anniversary of hurricane andrew.
the storm laid down a path of destruction costing billions of dollars. tom hudson has more from homestead-- a city andrew nearly wiped off the map. >> reporter: in the days after andrew roared ashore, this is what it left behind. home after home in some neighborhoods, not just damaged, but destroyed. torn to pieces by the storm's ferocious winds with gusts topping 150 miles per hour. >> i was laying in bed and all of a sudden the roof came off. >> huddled in that bathroom not knowing what was going on, feeling the walls move. >> ah, it was terrible. i never want to go through it again. >> reporter: here's what 20 years can do for that same neighborhood. homes have been rebuilt. lives restored and a community re-established. andrew remains one of the most destructive and expensive hurricanes in u.s. history. evidence of its devastation was still around when jon burgess moved to homestead two years after andrew. >> you still drove around and saw neighborhoods that were plastered up with insurance
numbers on the pieces of wood, for many years after. >> there really wasn't an economy here. it was just people trying to survive. >> reporter: burgess is now vice-mayor of homestead, helping manage a city that has tripled in size since andrew. it's been 20 years since hurricane andrew came ashore here in homestead, florida but the recovery still continues. this had been a home that was damaged during the storm two decades ago. it was left standing up until this week when it was finally destroyed. 80% of homestead's home were destroyed during that storm. >> with what we could call our second hurricane andrew. the building boom and the collapse of it, homestead is struggling again a little bit you know. >> reporter: it was among the hardest hit communities by the foreclosure crisis. in july, one out of every 686 housing units nation wide received a foreclosure filing according to real estate data firm realty trac. in homestead, that was one out of every 242 units. 76% of the city's single family home sales last month were
distressed properties. >> it's been another storm. a four year storm. i believe we've lost over the last four years close to somewhere around 68% of our tax base. >> reporter: after andrew, homestead was able to rebuild and grow, helped by the availability of land-- a scarcity in south florida. it's on the mend again thanks to jobs in health care and education as housing slowly recovers. tom hudson, "n.b.r.," homestead, florida. >> susie: we learned just moments ago that a california jury has reached a verdict in the legal dispute between apple and samsung. we're still waiting for that verdict to be read in court and we'll have an update a little later in the broadcast. meanwhile, a court in south korea has found that apple and samsung are both guilty of infringing each other's patents. a three-judge panel ruled that apple violated two samsung patents and samsung violated one apple patent. both companies have been ordered to pay small penalties about $20,000 each and to stop sales of their infringing products in
south korea. shares of apple edged higher on that ruling, as did many other stocks, making today a pretty good end to a pretty bad week for the market. investors were optimistic the fed still have tools to stimulate world economies. the s&p 500 briefly traded below 1,400 this morning. ultimately, the index stayed in positive territory throughout most of the day on word the european central bank is considering a new bond-buying program. that letter from fed chairman bernanke we talked about, also helped underpin the market. but even with the better tone, volume remained anemic. just over 500 million shares changed hands at the nyse, while at the nasdaq it was about 1.3 billion, the lowest this week. nevertheless, there were some sector standouts, including telecom services, consumer staples and healthcare all of which tacked on nice gains. healthy moves in a handful of
pharmaceutical stocks helped to lift the healthcare sector. gained 6% after the f.d.a. cleared the company's generic pain relief patch. eli lilly added more than 3% on word trials of it alzheimer drug shows it slowed cognitive decline in patients with mild symptoms. and alexion pharmaceuticals rose just under 3%. verizon communications helped lift the telecom sector and it was the dow's top performer. shares dialed up a gain of 92 cents or 2%. that's after word yesterday the federal communications commission granted the telecom giant four spectrum deals. the action allows verizon to expand its 4-g and high speed data networks. and shares of aruba networks surged after quarterly revenue for the wi-fi equipment maker beat estimates. aruba actually reported a fourth quarter loss because of a tax issue, but sales and adjusted earnings were strong.
as a result, investors snapped up the stock, powering it to a gained of 14% and making it one of the nasdaq's most actives. another nasdaq high-flier today: amazon.com. it closed at an all-time high. it gained $4.50 to nearly $246 a share on word of an expanded deal with abc universal and continued speculation about a new tablet. it was a much different story for shares of autodesk. late yesterday, the company missed quarterly revenue targets and cut its outlook, causing one analyst to call it a horrendous quarter. today's selloff of nearly 16 percent means autodesk has erased virtually all the gains it added since october. one last noteworthy stock: disney. it continued to trade near its all-time high of $50 a share. "time" magazine is reporting that disney is holding internal talks to potentially buy euro- disney. it already holds 40% of the theme park. and among our e.t.f. most actives, there were gains across the board.
but our emerging markets showed the smallest gain. and that's tonight's market focus. >> susie: our market monitor says no matter what the fed does or doesn't do. investors can still make money investing in mid-cap growth stocks. he's brian lazorishak, portfolio manager of chase investment counsel. hi, brian. nice to have you with us. >> hi, susie. nice to be here again. >> susie: so you're pretty much thinking still over the next year, year and a half,
stocks will be on the up side. tell us why. >> well i think you can have some short-term volatility and certainly a lot of eyes on the fed and what happens next week. but we remain constructive on stocks over the next 12-18 months, and particularly, the ones in the portfolio of the chase midcap growth fund. >> susie: let's talk about some of them. you have four stocks to tell us about. at the top of your list oil states international, o.i.s., trading here at the big board. up for the day, flat for the year. why do you like it? >> yeah, oil states international is an interesting company. we screen all the companies we're considering for purchasing the fund for consistent growth, for earnings momentum, for relative price performance. oil states hit all of those metrics and then we wanted to dig in and learn a little bit more about the story, what you think of as a traditional oil service company, an offshore business that's doing quite well. but what we're really excited about with the company is their
accommodations business. large oil producers-- >> susie: go ahead. >> large oil producers such as sun core are look for oil and things in out-of-the-way places like northern canada. they need somewhere to house their workers. so oil states provides housing for these workers, primarily in canada and australia. >> susie: let's move on to some of your other stock, polaris industries, p.i.i. on the n.y.s.e.. looking at the stock charkt up 30% year to date. what's driving that growth? >> polaris is a great company. they call themselves the best in power sports. they are the leader in off-road vehicles are and specifically in side-by-side off-road investigation. while a lot of consumer-oriented companies have struggled, this company has been able to grow share in an admittedly difficult consumer environment, and we think the product innovation
will allow them to keep that growth going forward. >> susie: let's talk about your next stock, p.q.r., wasn'to services. this is a new stock in your portfolio. why are you recommending it? >> wasn'to services is a new purchase for us. we bought it back in june. everybody is familiar with the problems with the united states electrical grid. by some estimates, about two-third of the grid has passed its useful life. they provide electric transmission services, about two-third of their business. they make money by upgrading that grid, and we're really starting to see the utility companies put money to work doing those upgrades. they stand to benefit for the next several years from this upgrade cycle. >> susie: let's squeeze in your last one, pet smart, p.e.t.m. on the nasdaq. nice move on the stock, showing i guess that people just love their pets. tell us about why you like the stock. >> people do love their pets.
we've owned this stock since the fall of 2010 for the fund. it's done quite well over that time. estimates are there are 94 million cats and 78 million dogs in the united states. and those dogs and cats all need food somewhere. petsmart is the leading pet supply retailer with about 1200 stores across the country, in canada, and really growing well, particularly in the consumables, high-end dog and cat food, corrigannic foods, natural foods, that sort of thing. >> susie: let's look at your previous picks from february. dollar tree and new star are both up since you recommended them. congratulations on that. a 22% drop on curvy. do you still own the stocks? what's your take on them? >> we do still own dollar tree and news star and think highly of both those companies. the growth pattern looks to be on track. curvy, on the other hand, ran
into some issues, has been sold from the fund, since that time. >> susie: all right, we're going to to leave it there. any disclosures to make, brian? >> own all the stocks through my personal chase midcap growth fund. >> susie: or market monitor brian lazorishak, portfolio manager of chase investment counsel. coming next week on "n.b.r.": as the republican national convention gets underway, we'll have continuing coverage and talk with mitt romney's top economic adviser glenn hubbard. in tonight's "beyond the scoreboard," we look at lance armstrong. his lifetime ban today from cycling competitions will have an impact on the sport and his status as the seven-time winner of the tour de france. but armstrong's refusal to fight charges that he used performance-enhancing drugs, also raises questions about the future of the lance armstrong brand. here with some thoughts, sports expert rick horrow. >> even the most jaded cynic
can't doubt seven time tour de france winner lance armstrong's motives for launching his livestrong foundation, which has raised close to $500 million and helped over 550 cancer research organizations around the world. after battling testicular cancer in the mid-90s armstrong took up the cause, vowing to help others battle the disease. but after armstrong's announcement on thursday that he will no longer contest drug charges by the u.s. anti-doping agency, it's apparent that livestrong's signature yellow rubber bracelets are the only thing that now shield his brand's reputation. recent "q" scores, the advertising metric for a brands likeability, reveal that nearly three times more americans dislike than like him. nike, his biggest endorser and partner in the team livestrong line of athletic shoes, apparel, and gear, is vowing continued support, but its likely they will cut back on using armstrong's image in their online store and ads over time. for the sake of livestrong and
the millions of cancer patients it continues to support, armstrong now must make another difficult choice. it's not just a matter of temporarily moving to the back seat of the tandem bicycle he rides with his namesake foundation. for the foreseeable future, until public memory has faded, armstrong needs to get off that bike and walk away. i'm rick horrow. >> susie: when it comes to doing business, it's important to remember that how you make people feel and making people feel at home can have a big impact on your bottom line. here's author and educator lou heckler. >> we visited some friends recently on johns island, south carolina. the home had actually been in the woman's family for many years and we enjoyed seeing that beautiful part of the low country with her and her husband. most of the time we went in and out through the garage. the door into the house included a screen door that creaked and sputtered every time it opened and closed. isn't that a great sound? our hostess asked. i love that sound. it reminds me i'm home. possibly like you, i have lived in many homes.
the red brick house i grew up in is more than 60 years old now and it still gives me a little heart flutter when i see it. the first home my wife and i purchased was also brick, but much smaller and with the outlandish house payment of $237 a month! surrounded by azaleas and daffodils and jonquils, i don't know of a prettier place in spring. our current home is our dream house-- lots of light and windows and big, open spaces to gather and to welcome guests. i think that last line is the common denominator: a place to welcome guests. i know businesses can't provide all the feelings we have when we really feel at home, but i wonder this: what does your place of business feel like. i said feel like, not look like. do your customers and employees feel welcomed? i'm lou heckler. after three days of deliberation a federal jury ruled some samsung phones did copy apple iphone features like scrolling and multitouch function. no word on damages. alle was seeking as much as $2.5 billion from samsung. the case could rewrite how
global patent cases are decided in terms of mobile product. we'll have complete coverage on this ruling on monday. and that's "nightly business report" for friday, august 24. good night, everyone. have a great weekend, everyone. we'll see you online at nbr.com and back here next week. captioning sponsored by wpbt captioned by media access group at wgbh access.wgbh.org